Classic Business Day gets a US realtor on the line to find
out whats really happening in the US housing market and if its
as bad as some are saying

LINDSAY WILLIAMS: The US housing market we are told is in decline.
US mortgage lending giant Countrywide announced its results yesterday
- they werent particularly good, and the share price closed over
11% lower yesterday. People are now speculating that the first of the
worlds asset bubbles is about to burst. We hear about the market
in terms of the companies financials but what about the people
at the coalface, the people that are actually buying and selling houses
in the United States? Thats where the action really is. On the
line now from Westchester just north of New York City is Steve Ross
a realtor at Remax. Steve, are the horror stories were hearing
in South Africa about the plunging US house prices actually real or
is this a fabrication?

STEVE ROSS: It sounds like exaggeration - it doesnt sound like
its totally out of line, but extremely exaggerated. We are probably
down 10% from two years ago - so the direction is correct, but thats
after being up over 100%. While that might sound like a bubble thats
been traditional for real estate around here for the decades that Ive
been around - Ive seen many trends where over the course of a
period weve gone up 100%, and then theres a correction while
house prices and affordability get back in line. Prices come down 10%
stay there for a little while and eventually usually run up again several
years later.

LINDSAY WILLIAMS: The problem is of course Steve that 10% down in two
years doesnt help the people that bought two years ago - and a
lot of people have bought as the mortgage market has become more aggressive,
particularly the sub-prime mortgage market - do you think this is contributing
to the current downturn?

STEVE ROSS: Absolutely. 10% is not a large amount to go down if you
bought 10 years ago and it went up 100% and it came down 10% - but if
you bought two years ago with very little money down yes, absolutely,
at that point youre faced with a problem - your house is worth
less than what you owe.

LINDSAY WILLIAMS: Sure. The sub-prime market is one that has captured
the imagination in financial circles anyway - its not something
were familiar with in South Africa - do you have clients that
are exposed to this debacle?

STEVE ROSS: If you mean lenders no, Im not involved with the
lenders - but I know people that I talk to who dont have very
much equity, who are upside down in their homes. For them its
a stressful situation because theyre kind of forced with a selling
situation - but its still not the majority of the market. Its
a very small part of the market at this point at least.

LINDSAY WILLIAMS: The area that youre based in is Westchester
- which is very much as far as I know with my limited knowledge Ivy
League country. What about the rest of the country? America is a vast
place - what about places like the Midwest and further south Florida?
Are they faring worse than Westchester?

STEVE ROSS: I think we are in the middle - Im hearing some places
are actually doing well but not many, and Im hearing places are
doing worse. Florida you bring up as an example - Florida had a little
bit more excessive speculation because of the belief that the Baby Boomers
were getting ready to retire in the next 10 years, and they were going
to be moving south looking for sunny climates and Florida was going
to be their home. So there was extremely rapid construction and appreciation
there - and the drop there has been more than 10% - but I get the feeling
and what Im reading and what Im seeing and talking to other
agents across the country that on average thats about where it
falls in line - about 10%. As you suggested if you bought a house with
less than 10% down you do have a problem.

LINDSAY WILLIAMS: The behaviour of buyers and sellers - has that changed
markedly for example in the first seven months of this year? Are the
buyers getting a little bit more circumspect and cheekier and the sellers
becoming a little bit more desperate?

STEVE ROSS: Yes, I would say thats definitely true. Obviously
we were going through a period of time when there were many more buyers
than sellers - so buyers were in a position where they had to jump or
miss the boat, and sellers could be cocky. Now, as you suggest the situation
is reversed - buyers are cocky and not overly worried about missing
the opportunity feeling theres another one right around the block,
and sellers are in a position where if they arent aggressive in
their pricing someone else will sell the house, not them.

LINDSAY WILLIAMS: How important do you think is the US housing market
for the overall US economy? Again, youre right at the coalface
- you broker deals between buyers and sellers, and its a major
investment - are people starting to worry about it?

STEVE ROSS: Theres a certain amount of people that are worried
about it. I think most people I talk to still see it as a home - and
more importantly I think most people look past the short-term with the
belief that while they dont know where the market is going in
the next year or so, past experience has been that if youre looking
out on a ten-year horizon youre pretty safe. Whether thats
true or not no one can say for sure - but obviously most of the buyers
I talk to are looking for a home and willing to bet that the long-term
is at least positive.

LINDSAY WILLIAMS: Yes, property in the long-term has always been a
good bet